| 1. To sign an income tax return for an incapacitated person as an agent
holding a durable power of attorney, the power must grant the agent authority to handle
tax matters. 2. A spouse signing an incapacitated person's name to an income tax return
must have been appointed as the incapacitated person's conservator.
3. An income tax refund may never be claimed later than three years after filing the
return or two years after paying the tax.
4. A child can claim a personal exemption for his or her parent if the parent:
A. Has gross income of less than the amount of the personal exemption.
B. Did not file a joint return for the year.
C. Is not the child's dependent.
5. In determining whether a parent is his or her child's dependent, which of the
following can not be considered support of the parent?
A. Food.
B. A free room.
C. Clothing.
D. All of the above are considered support.
E. None of the above is considered support.
6. Jo Jones has five children. Jo needs $1,000 per month for living expenses. Jo
receives $400 per month in Social Security. Children A, B, C and D each contribute $100
per month for Jo's support. Child E contributes $200. Assuming proper procedures are
followed and requirements other than support are met, can Child A claim a personal
exemption for Jo?
7. See hypothetical above in Question 6. Can Child E claim a personal exemption for Jo
assuming the procedures and conditions other than support are met?
8. An employer must pay FICA (Social Security and Medicare tax) for domestic help if
the employer is required to pay FUTA (unemployment tax).
9. Leslie Smith's licensed social worker has prescribed a plan of care which includes
personal care services because Leslie is chronically ill. Leslie's kindly neighbor will
come into Leslie's house daily and provide these services. Which of the following can be
used by the IRS to deny a medical expense deduction for the neighbor's wage?
A. The care plan was prescribed by a social worker, not by a physician.
B. The services are provided in Leslie's home, not a facility.
C. The services are only for personal care, not therapeutic treatment.
D. The neighbor is not a licensed health professional.
E. None of the above.
10. Long-term care insurance can be expensive for an older person. If the premium in
1999 for your 71-year-old client is $2,700, would it be fully deductible as a medical
expense?
11. What is a "viatical settlement?"
A. A sediment of cholesterol in the veins.
B. A pledge of a life insurance policy as collateral for a loan.
C. A financial arrangement available only to persons suffering from AIDS.
D. A sale of a life insurance policy prior to death by a terminally ill or chronically
ill insured.
12. A child may deduct a dependent parent's unreimbursed medical expenses if they
exceed 7.5 percent of the parent's adjusted gross income.
13. Ben pays his mother's medical expenses and furnishes more than half of his mother's
support, providing a nice supplement to her gross income of $5,000. Assuming other
requirements are met, may Ben claim his mother as a personal exemption and deduct his
mother's medical expenses?
A. Ben may claim a personal exemption but not deduct the medical expenses.
B. Ben may deduct the medical expenses but not claim a personal exemption.
C. Ben may deduct the medical expenses and claim a personal exemption.
D. Ben may claim neither a personal exemption nor deduct the medical expenses.
14. Domestic workers who meet the definition of "employees" must be given a
W-2 form even if the employer does not withhold income tax.
15. To fully exclude the proceeds of a life insurance policy (accelerated death
benefit) from a terminally ill person's gross income, the person must die within six
months.
16. A child who contributes less than half of a parent's support can never claim the
parent as a personal exemption on the child's income tax.
17. Leslie, whose doctor has certified her to be a chronically ill individual, lives
alone and needs assistance, but with bathing and dressing only. An aide, arranged by the
doctor's registered nurse, has come into Leslie's home daily for the last nine months to
help Leslie with those tasks. If all other requirements are met, can Leslie deduct the
aide's salary as a medical expense?
18. Edgar is liable for both FICA and FUTA withholding for nursing aides hired to
provide for his long-term care needs. Must Edgar pay this tax every quarter?
19. Karen's father is a citizen and permanent resident of Mexico. Assuming the other
requirements for claiming a personal exemption are met, can Karen claim a personal
exemption for her father?
20. ACME Widget owns a life insurance policy on the life of its president, Fred
Camshaft, who is terminally ill. The policy contains an accelerated benefits rider. ACME,
shortly before Fred's death, cashes in the policy utilizing this rider. Are the proceeds
excludable from ACME's gross income?
CERTIFICATION
 This activity has been approved for Minimum
Continuing Legal Education credit by the State Bar of California in the amount of 1 hour.
The State Bar of California certifies that this
activity conforms to the standards for approved education activities prescribed by the
rules and regulations of the State Bar of California governing minimum continuing legal
education. |
